Nigeria spent a total of N3.09 trillion on debt service obligations in the first seven months of 2022, according to the latest figure provided by President Mohammadu Buhari on Friday.
The president, who spoke at the National Assembly while presenting the 2023 budget estimate stated that total non-debt recurrent expenditure from January to July 2002 was N3.24 trillion, of which N2.87 trillion was for Salaries, Pensions and Overheads.
Furthermore, about N1.48 trillion had been released to MDAs for capital expenditure as of the end of July 2022. “I am pleased to inform you that we expect to fund MDAs’ capital budget fully by the end of the fiscal year 2022.
“As of the end of July 2022, the fiscal operations of the Federal Government resulted in an estimated budget deficit of N4.63 trillion.
This represents 63 per cent of the estimated deficit for the full year. This is largely attributable to revenue shortfalls and higher debt service obligations resulting from rising debt levels and interest rates.
The deficit was mainly financed through domestic borrowing amounting to N4.12 trillion. Hence, the total public debt stock increased from N39.6 trillion as of the end of December 2021 to N42.8 trillion as of the end of June 2022.
“However, our debt position remains within cautious and acceptable limits compared to peer countries. As of the end of June 2022, total public debt is within our self-imposed limit of 40 per cent of GDP, which is significantly below the 55 per cent international threshold for comparator countries, and a global average of 99 per cent post-COVID-19.
“Nonetheless, our debt-service-to-revenue ratio needs close attention. The current low revenue performance of the government is reflected in the low revenue-to-GDP ratio of just about 8 per cent.
“Our medium-term objective remains to raise this ratio to 15 per cent, at which the debt service to revenue ratio will cease to be a concern.
“Revenue shortfalls remain the greatest threat to Nigeria’s fiscal viability. We have therefore accelerated efforts towards ensuring that all taxable Nigerians declare income from all sources and pay taxes due to the appropriate authorities.
“We are also monitoring the internally generated revenues of MDAs to ensure they are appropriately accounted for and remitted to the Consolidated Revenue Fund.
“I am happy to report that the revenue collection and expenditure management reforms we are implementing are yielding positive results, with recent significant improvements in non-oil revenue performance.
“However, while we continue to implement revenue administration reforms and improve our collection efficiency, we urgently need to find new ways of generating revenue.
“As we seek to grow our government revenues, we must also focus on the efficiency of utilization of our limited resources. Critical steps we are taking include immediate implementation of additional measures towards reducing the cost of governance and the discontinuation of fuel subsidy in 2023 as announced earlier.
“We are however mindful of the fact that reducing government spending too drastically can be socially destabilizing, and so will continue to implement programmes to support the more vulnerable segments of society,” the president said.